Italy

After two decades, the euro’s minders look set to drive the Eurozone into deep trouble. December was the last month of the ECB’s monthly purchases of government debt. A softening global economy will increase government deficits unexpectedly. The consequence will be a new cycle of sharply rising bond yields for the weakest Eurozone members, and systemically destabilising losses in the bond portfolios owned by Eurozone banks

The blame-game

It’s the twentieth anniversary of the euro’s existence, and far from being celebrated it is being blamed for many, if not all of the Eurozone’s ills.

MILAN/ROME (Reuters) – Italy plans to offer subsidies of up to 6,000 euros ($6,800) to buyers of new low emission vehicles and will increase taxes on new petrol and diesel cars, two government officials said on Wednesday.

Concerns over climate change are pushing European lawmakers to tighten emissions regulations, but the car industry says that would harm its competitiveness.

Money manager Michael Pento says things are going to get much worse from here. Pento explains, “They understand when the stock market goes down, consumption and the wealth effect crumble, and the economy is going to falter.

Someone asked recently how many times I had “crossed the pond” to Europe. I really don’t know. Certainly dozens of times. It’s been several times a year for as long as I remember.

That makes me an extremely unusual American. Most of us never visit Europe, except maybe for a rare dream vacation. And that’s okay because our own country is wonderful and has a lifetime of sights to see. But it does affect our perspective on the world.

– He is betting against two UK banks in the lead up to Brexit – Eisman may short 50 other UK firms if “Trotskyite” Corbyn becomes UK PM – Eisman is famous for betting against the US housing market ahead of the 2008 subprime-mortgage crisis

After a long, initially-successful run promoting European integration and mass immigration, German Chancellor Angela Merkel saw the bottom fall out of her political fortunes this year. This morning she stepped down as leader of the formerly-dominant Christian Democrat party and promised not run again when her term as Chancellor ends in 2021.

What happens next is almost certain to be chaotic, as the following chart (courtesy of this morning’s Wall Street Journal) makes clear:

Wall Street’s playbook stipulates that every down tick in the market is just another buying opportunity. While that is most often true, peak margins, a slowing global economy and the bond bubble collapse makes this time more like 2008 than just a routine selloff.

In the vanguard of this coming market crash is China, whose make-pretend growth rate slid to 6.5% in the third quarter. This is the slowest pace of growth that the communist government has been willing to own up to since the last global financial crisis. Leaving one to conclude that the reality in China is far worse.